MONEY sent home by overseas Filipino workers (OFWs) reached a record high in 2019 despite global uncertainties as higher inflows from other countries offset a decline in remittances from the Middle East.
Cash remittances grew by 4.1% to a record $30.133 billion in 2019 from the previous high of $28.943 billion in 2018, data from the Bangko Sentral ng Pilipinas (BSP) released on Monday showed.
The growth in cash remittances last year was well above the three percent projection of the BSP for 2019.
Inflows for December alone also grew by 1.9% to $2.902 billion from $2.849 billion in the same month in 2018. The month’s level likewise surged by 22.34% from the $2.372 billion recorded in November.
Meanwhile, personal remittances, which include inflows in kind, climbed 1.9% to $3.216 billion in December from $3.157 billion a year ago. The whole year saw personal remittances expand by 4.1% to $33.467 billion from the $32.213 billion logged in 2018.
“Notwithstanding pockets of political uncertainties across the globe, cash remittances in 2019 remained strong,” the BSP said in a statement.
“This is evident in inward remittances from Asia, the Americas, and Africa, where inflows grew annually by 12.3%, 10.6% and 4.8%, respectively. The growth of inflows in these regions more than made up for the 9.8% decline in remittances from the Middle East.”
Cash remittances from both land and sea-based OFWs went up by 3.5% and 6.5% last year to $23.6 billion and $6.5 billion, respectively.
The BSP said bulk of remittance inflows in 2019 came from the United States, which comprised more than a third or 37.6% of total inflows. This was followed by Saudi Arabia, Singapore, Japan, United Arab Emirates, the United Kingdom, Canada, Hong Kong, Germany, and Kuwait, which collectively were the source of 78.4% of the total cash remittances.
An analyst said strong growth in the US helped propel OFW remittances last year.
“This growth may be attributed to the consistent economic growth of the US, which accounts for about 37.6% of total remittances in 2019 and that has continuously experienced economic expansion since 2010,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in an e-mail.
VIRUS MAY AFFECT INFLOWS
Analysts said remittances this year may be affected by the outbreak of the coronavirus disease 2019 (COVID-19) from Wuhan, China as it remains uncertain when the spread can be contained.
The BSP expects remittances to climb 4% this year.
“The coronavirus is particularly worrisome as nearly a quarter of remittances come from Asia, with around one in six of total remittances coming from Macau and mainland China alone. As of now, remittance growth risk hinge on the duration and containment of COVID-19,” Security Bank Corp. Chief Economist Robert Dan J. Roces said in an e-mail.
ING Bank NV-Manila Senior Economist Nicholas Antonio T. Mapa said the virus has forced people into quarantine, which could hit consumption patterns and, in turn, affect the services industry, where most OFWs are employed.
“The recent plight of the cruise ships around the world will likely put pressure on cruise liners and the hospitality industry as a whole, making it difficult for Filipinos to send home remittances should their salaries be curtailed or they lose their jobs altogether,” Mr. Mapa said in a note sent to reporters.
He, however, noted that OFW remittances have remained strong over the years even amid global recessions or events that have affected Filipinos’ host countries.
“OFWs are deployed across the globe in several jurisdictions and in several diversified services professions, making them more able to sidestep economic downturns,” Mr. Mapa said. “Case in point, remittances from the Middle East, a mainstay source of OF remittances, have remained in contraction for last year and yet overall remittance flows have remained largely positive.”
Meanwhile, UnionBank’s Mr. Asuncion said the impact of the virus will likely be minimal as remittances from China are “relatively small compared to other source countries such as the US and Saudi Arabia.”
“The biggest downside would be the decline of inflows coming from Singapore, that has a bigger portion of inflows contribution among hosts economies. But, overall, the impact may be minimal and recovery may be quick,” Mr. Asuncion said.
He, however, warned of other risks to remittances, such as geopolitical turmoil in key remittance sources and a slowdown in US growth due to trade issues. — L.W.T. Noble